Marriott's Commissions Cut: A Good Thing?

Since Marriott International's announcement that they will cut intermediary commissions on meetings by 30 percent there has been a big rumble in our industry. A quick review of interviews in industry publications and across social media shows there are a lot of intermediaries who are very angry and confused by these coming changes with many seeming like they want to be vindictive. In our view, now is not the time to "get even" with "Big Bad Marriott." Now is the time to reflect on what brought Marriott to this business decision, and make changes in how we operate in order to improve a broken group-sales process. We might find that, in the end, these changes to our industry will be a good thing for all involved, intermediaries included.

The impact of intermediaries

First, let's take a look at why this change happened. The costs among group-sales organizations has been increasing for years. In fact, when we were insiders, running Gaylord's sales team, we wrestled with the escalating cost of sales. With pressure on meeting planners to justify return on investment for their department, planners turned to intermediaries to handle price exploration. With the ease of sending RFPs to hotels, the number of intermediary organizations exploded. With easy online RFP distribution came lead spamming. With increased lead spamming came the need for hotels to respond with lead catchers and call centers simply to manage the volume. The cost of managing a high volume of unqualified or mismatched leads across the hotel brands has exploded, and Marriott is trying to regain some cost control.

For the past decade, we intermediaries have been our own worst enemies. Candidly, some intermediaries among us have forgotten what we do: We intermediate. That means we are facilitating a transaction between a supplier and an end-user. For us to continue to earn our keep, we need to add value. This is the part of the equation we believe has been forgotten by some intermediaries. And unfortunately, as the expression goes, "A few bad apples spoil the bunch."

We, as intermediaries, need to remember who pays us: The suppliers.

They are paying us for access to highly qualified customers who fit their hotels' space and calendar. The end-user expects the same thing: They expect us to know the market, to know the hotels and to find them a great fit at a fair value at the right time.

Unfortunately, some planners have not provided adequate information to the potential supplier. This means that they have not held themselves accountable to provide a consistent, information-rich, quality lead to the hotel. These planners or intermediaries simply found it easy to send lots of RFPs through Cvent and other channels then await hotel responses. What does that say for the value of the service provided by intermediaries when many of them share commissions with the end-user customer?

We can do better. Are we excited about the change in commission structure? Of course not, but providing the best service to our meeting planners (which means finding them a great fit with a hotel partner) is what WE should be focused on.

It's not only the intermediaries

While the cost of booking group business has increased for a hotel, these increases cannot be blamed on intermediaries alone. It is the total cost to a hotel company that should be evaluated, since group commissions are only a component part of this equation.

Additional costs are everywhere within hotels: They have added lead catchers, call centers and sales offices to manage the massive number of (mostly incomplete or unqualified) group RFPs they receive (generated mostly through Cvent). With all these added internal costs, it seems that presently the only energy being spent pursuing cost reduction is to reduce intermediary commissions. To solve the larger cost-control problem, the hotel community needs to support efforts and innovations to find a solution for meeting planners and intermediaries seeking to more efficiently book their properties.

To the hotel brands that might be reading this, please understand that our statistics indicate that nearly 60 percent of an intermediary's or meeting planner's time in the group sourcing and booking process is spent chasing down hotels to get meaningful responses back for RFPs.

This inefficiency is not only felt by intermediaries, but also by your property sales team. Your sales organization spends an enormous amount of time chasing responses as well. Why? Because hotels keep customers in the dark as to a hotel's general space and rooms availability unless an RFP is sent to a hotel for response. If the only way a planner or intermediary can determine if your property can accommodate the group is to send an RFP, then planners and intermediaries will send an RFP, whether or not there is an intention or interest in booking your hotel.

This lack of transparency fuels cost-creep for your enterprise. Without any change in this inefficient process, acquisition costs of group business will continue to increase for hotels (and on this point, intermediaries are not to blame).

Our industry is changing

As an industry, we are failing to embrace and deploy technology to improve efficiency in group bookings. We operate in an incredibly clunky and inefficient marketplace. We need to introduce better information to all constituents involved in the process.

We are not the only industry that has had to change based on the need to provide better information in the process – especially to the end user buyer. Let's follow the lead of the residential housing market, where innovative companies like Zillow and Redfin have positively impacted their industry by providing better information to the buyer, seller and the broker, making everyone smarter and more efficient.

It's a time of significant change in the meetings industry. Marriott has fired the first shot in the battle to reduce group-bookings costs.

We should take this time to reflect on our jobs as intermediaries and look to add value to our supplier partners.

Do what they pay us to do: Qualify the "right match" customer and facilitate a fair transaction between supplier and customer.

Perhaps as we make strides in better facilitating transactions, the hotel brands can spend more time focusing on delivering better information to customers sooner, and we'll get to the other side of this commissions cut and realize it has brought change for the good.

Kemp Gallineau, is CEO for Groups360, a full-service meetings-technology company.